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Google's not so secret weapon in selling the Nexus One: Search dominance

When it comes to selling smartphones, it pays to be the king of search. Google jumped directly into the smartphone seas this week with the launch of the Nexus One. One of the first things the search giant did (besides open an online store to sell the phone) was put a big ad for the phone on its homepage.

That's prime real estate, especially considering that the pristine page is generally ad free. But Google has other tricks when it comes to search that could be more dubious. Like manipulating search results and blocking advertising on its trademarks.

Google
doesn't like to think of itself as a media company, but as the search giant
acquires content startups and starts selling its own products, the
lines are getting blurry.

Google's smartphone is the first phone sold directly to
consumers online. It is not sold in stores and has almost no real estate on T-Mobile's site save for a searchable link that points users to Google's online store.

But Google has ways around
these handicaps. For starters, there's that covetable slot on google's homepage. According to Compete.com, Google.com gets over 146 million unique U.S. visitors a month, so that's nothing to sneeze at. But few Googlers actually go to the search engine's homepage anymore. More intriguing are the spots that the Nexus gets in Google's search results. And those are also more complicated.

Back when Google put an ad for T-Mobile’s G1 on its homepage, there was outrage that Google was gifting itself such enviable ad space when it had denied such placement to other companies. But Google wasn't bumping anyone else off the page to put links to its own products up there.

In the case of paid and organic search results for its products, that may be exactly what's happening. Google has earned this criticism before and the company insists that it has an AdSense account and pays for Google search ads just like everyone else.

But when you're paying your own company for prime placement, it still seems a bit unfair. And that could be what's going on now with the Nexus.

When I searched for "smartphone" earlier today, Nexus One was the top paid result, and the only brand that appeared in organic results on the page:

Results look a lot different when you go to other search engines. My search results for "smartphone" on Bing and Yahoo
didn't return a single result for the Nexus, but plenty of links to
competitors' websites. Meanwhile, Google either isn't selling ads to
competitors on the term "Nexus One" or none have been purchased yet. But a search for "Nexus One" on Bing shows up with Blackberry links on the top and bottom of the page.

Considering the large marketshare that Google has in search, slight favoring of its products could become a thorny issue, especially as Google grows into the content business.

According to Google publicist Jake Hubert:

"Like
hundreds of thousands of other businesses, we believe in the value of
search marketing to connect with web users.

With regards to the organic search results, our philosophy has always been to not manually
intervene with search results (unless a site violates our policies or
we must for legal reasons). The ranking of search results is decided by
our algorithms, using the contributions of the greater Internet
community."

But no one knows the details of how Google's algorithm chooses its placements. And according to Andrew Goodman, President of Page Zero Media:

"What's important about this is that
it's just one instance of a problem that could grow in all directions. It started out as a question mark five years ago when people realized
that Google was potentially getting into different verticals."

While other advertisers have to pay full price to appear in the search engines' results, Google has much more leeway in how it presents itself there.

Because so much of Google's search algorithm is unknown, it's hard to
say exactly what propels the placement of a result onto the first page of search terms. The
results are personalized and change constantly, and while Google has never aggregiously abused its search algorithms to benefit its own products, that ability is well within the company's power. Says Goodman:

"It's not longer a question that Google can manipulate results. They can."

A more pressing concern is whether anything should be done about it. Mark Schwartz, managing parnter of SteakNY, thinks Google is acting within its rights:

"It's no surprise they are pulling out all the stops, after all it’s their product and their marketing tools. Why not take full advantage of everything they have to offer?”

But as Google expands into growing markets, its search moves are going to be watched with increasing scrutiny. And on top of attracting inquiries from antitrust regulators, Google has to worry about breaching the trust of its users. When Google launched, the company's original promise to keep its homepage ad free set it in stark relief to other search engines out there. As Google CEO Eric Schmidt said just last summer:

“People wouldn’t like [ads on the homepage]. We prioritize the end user over the advertiser.”

But while Google cares about users more than its advertising clients, the company cares about its bottom line even more. Says Goodman:

"Promoting their own products from the homepage is breaking a promise that Google implicitly made to searchers a decade ago."

If the company is also shifting search results in favor of its own products on a regular basis, upstarts like Bing may be getting even more users than they bargained for. And soon.

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Comments (8)

While reading this article I did a search on our newly minted Google Custom Search Engine. There was no ad or result result in the top 20 search results. Is this because I am in Toronto, Canada? The top ad was for the Blackberry with Rogers Wireless second. Most of the search results were dealing with different companies maunfacturing handsets with the Android OS and a few about AT&T support for those Android handsets.

Web master for www.becometheboss.net

about 8 years ago

Mike Stenger, MikeStenger.com

I never even thought about this but it's almost a guaranteed winning strategy. Google gets 2 billion searches a day and although not all of them are made on the home page, quite a few are and are made in the US. On top of that, they've got prime placement in Adwords so with millions of searches every month, you're looking at the phone catching on well with very little problem.

I think it's a sound business strategy. How can you lose with 146 million free visitors visiting your site per month. The placement of the phone image is also very interesting. It's located right underneath the search bar. I think many people are going to click on this image and they will jump to buying this device.

I, however, don't think that that's the best. The real stroke of genius is that google has not made any commitment to selecting a single partner. They will work with all carriers and not only that, they will negotiate the discounted price with each carrier. If you look at this strategy - I think it's simply brilliant. Aapl selected ATT for its carrier. While it was a solid success - I think AAPL got the losing end of the stick. AT&T is the worst carrier. I think, if apple would have used strategy similar to google's, they would have benefited even more.

If I have to predict, I will say that google will remove the image from its homepage within a month or so. They will simply sell it through google base and all other available marketing channels. The reason for that is because google would not want to see itself in a situation where all companies (Google adwords customers) get spooked...

I can't understand how anyone could get outraged, surprised, or annoyed by this move by Google.

Imagine that you ran a busy little newsagent that had a policy never to stick up posters in your window advertising local businesses, shows, events or items for sale.

If you had something to sell, or were involved with a show or event you wouldn't think twice of bending your own rules to look after number one. And I'm betting not many people (if any) would complain, because they'd all do the same given half the chance.

Google is simply looking after their bottom line. I'm sure if other Smartphone operators could do the same, they would.

I'm just looking forward to seeing how much one costs in the UK and what plans are available!

about 8 years ago

Christian Louca, Founder - New Mobile Start-Up at Stealth Mode

I think the strategy is sound and I don't blame Google for doing it. At the end of the day, if the device is good consumers will buy it, in the end word of mouth is enough to spread the buzz. Give it the intial push and create awareness and see it spread like wildfire. You got to give it to Google, with the AdMob acquisition and launch of Android they are well positioned to dominate the mobile market through technology and advertising. They also have access to all that iphone data on user behavior on the AdMob media network. This is so clever as I am sure this data will shape the way the Android is developed in the coming years. They will be one step ahead of their competitors all the time!

I thought this post was interesting, so decided to take a look and see if there was any evidence for search manipulation by Google (and Microsoft) for a product that they both currently offer: browsers.

My conclusion: there doesn't seem to be much evidence at the moment that Google or Microsoft are favouring their own product in search (at least as far as browsers are concerned). Not to say, of course, that we shouldn't watch out for this in the future.

about 8 years ago

monalisa222

Recently I found a program that lets me set up an auction for my own space, allowing advertisers to bid on getting the spot, with the highest bidder getting his/her ad shown.

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